Release Date: October 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Balkrishna Industries Ltd (BOM:502355, Financial) reported a 4% year-on-year growth in volumes for the second quarter and a 14% growth for the first half of the year.
- The company achieved a 10% year-on-year growth in standalone revenue for the second quarter and a 19% growth for the first half of the year.
- The EBITDA for the quarter grew by 13% year-on-year, with a margin of 25.11%, and the first half margin stood at 25.6%.
- The company completed the CapEx for 30,000 metric tons per annum of high-value advanced carbon material, which is expected to contribute to future growth.
- A second interim dividend was declared, bringing the total dividends to INR eight per share for the year.
Negative Points
- Balkrishna Industries Ltd (BOM:502355) is facing weak demand in international markets due to geopolitical tensions and inflationary pressures.
- The company anticipates continued weakness in international markets for the remainder of the year.
- High sea freight costs and inflationary raw material scenarios are impacting the company's cost structure.
- The demand outlook remains uncertain, with no immediate improvement expected in key markets like Europe and North America.
- The company is experiencing challenges in the agricultural segment, which contributes significantly to its revenue.
Q & A Highlights
Q: Can you provide insights on the impact of raw material costs and pricing strategies for the upcoming quarters?
A: We implemented a price increase in Q2, which will impact Q3, estimated at about 1% to 2%. The raw material cost increase was around 3% to 4%, with sales price impact being approximately half of that. (Arvind Poddar, Chairman & Managing Director)
Q: What is the current demand outlook, and are there any signs of inventory correction?
A: The demand outlook remains weak, primarily due to demand issues rather than inventory correction, which we believe is largely complete. (Arvind Poddar, Chairman & Managing Director)
Q: How are European market dynamics affecting your business, and what is your view on M&A activities in the region?
A: We cannot comment on other players' strategies in Europe. Regarding M&A, we are observing the market but do not see any immediate impact on us. (Rajiv Poddar, Joint Managing Director)
Q: Can you discuss the impact of the new carbon black capacity on your revenue?
A: The new specialty carbon black capacity was operational in September, and its impact will be seen in the coming quarters. Currently, we sell about 50% of our carbon production, contributing less than 10% to revenue. (Arvind Poddar, Chairman & Managing Director)
Q: What is your margin outlook for the full year, considering the current economic conditions?
A: We expect margins to remain around 25% for the full year, consistent with our performance in the first half. (Arvind Poddar, Chairman & Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
